Following the Monetary Policy Committee (MPC) meeting, the Bank of Ghana (BoG) raised the policy rate by 200 basis points to 19 percent.
The Central Bank linked its decision to inflation, making it the second time in a year that it has done so.
Dr. Ernest Addison, Governor of the Bank of Ghana, stated to the media on Monday at the BoG’s Conference Room in Accra that “inflation expectations by consumers, businesses, and the banking sector have heightened.”
“The risk to the inflation projection is on the upside, resulting from the availability of inputs for food production, imported inflation, sustained upward adjustments and ex-pump petroleum prices and transportation costs, anticipated increases in utility tariffs, and potential wage pressures.” The second-round effect of these imposed price modifications will intensify inflationary pressures on the forecast, according to Mr. Addison.
He continued: “These considerations show that with the strong rebound in growth and the closing of the negative output gap, the balance of risk is clearly on inflation.
“The MPC took the view that it needed to decisively address the current inflationary pressures to re-anchor expectations and help foster macroeconomic stability. On the basis of the above assessment, the Committee decided to raise the policy rate by 200 basis points to 19%.”
